New Weapon for Marijuana Opponents: Racketeering Laws

Published
July 14, 2015

Although federal racketeering statutes haven’t been employed regularly against marijuana businesses, that could be changing.

One Colorado cannabis shop shut down recently after its owner decided that he simply couldn’t afford to keep paying for a legal battle with a Washington DC-based organization that sued his store and many of his business partners under federal racketeering laws, the AP reported.

Medical Marijuana of the Rockies, which was based in the mountain town of Frisco, was forced to close when the other defendants named in the suit quit doing business with the store, according to the AP. Bank of the West, for instance, canceled the shop’s account as a result of the legal action.

The lawsuit was filed in February and utilized the Racketeer Influenced and Corrupt Organizations Act, which was set up to fight organized crime and paves the way for criminal penalties tied to activities that aid criminal organizations. Under the statute, individuals who claim they were harmed by racketeering can also file civil lawsuits.

In this case, neighbors of the cannabis shop said the business lowered their property values, according to the Associated Press.

Medical Marijuana of the Rockies shut down just three months after the lawsuit was filed. Owner Jerry Olson recouped what he could, selling his flower inventory for $120 an ounce. The case was never even heard by a judge.

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8 comments on “New Weapon for Marijuana Opponents: Racketeering Laws”

Sad thing about this is in such suits, for them to be successful, “harm” must be proven; however, to get to this stage of litigation seems to be more expensive than MMJ of the Rockies can afford. This does not bode well for many, if not all of us in this business.

Really, here, we’ve all been ignoring the elephant in the room: Schedule 1. With 24 states now having legalized access to MMJ I think there’s more than enough voter-driven pressure available on federal senators and representatives from these states to ensure congress does remove this, original, major road block…but, most likely it’s going to take who knows how many more business casualties before enough voters start pressuring their federal representatives to change cannabis’s Schedule 1 status….please make me wrong here!

It’s clear who the real gangsters and racketeers are: the thugs in DC, who are in the pocket of the big pharma industry. If this tactic rears its ugly head elsewhere — as it probably will — the PEOPLE should unite behind their supplier, and file counter-suit on the grounds of RELIGIOUS FREEDOM as well as medical. “I salute thee, Ankh’n’Abis, divine Guiding Sentience of the Cannabis of Life, for I am the same, thy true Advocate and Adherent. So Mote It Be.”

It’s sounds like the store owner along with his family and employees suffered a damage or loss? Perhaps all those damaged by the closing of his store can sue the party or parties of interest in small claims court on consecutive days causing the defendants to appear everyday for weeks or more. As no attorney is allowed or required, the plaintiffs won’t spend a penny on them. Some jurisdictions allow for treble damages or up to a $10,000 judgment. It may not be much compared to the loss of their business, but if more and more people learned how to sue in small claims court, it could slow down or stop frivolous lawsuits such as the RICO attack by organizations from Washington. DC.
Dr. James Chappell

Excellent advice, Dr. Chappell! We’d also recommend attacking our attackers on the basis of 1st Amendment Rights, specifically freedom of religion — which even the feds are still a little leery of messing with. Some (not all) who partake of cannabis recognize it as a true Sacred Herb, for a great many reasons. (See “Temple of Ankh’n’Abis/Church of the Sacred Herb” on Facebook.) Using this, plus the medical-based approach, gives us a two-pronged attack.

My generation WAS the research. We didn’t wind up loosing our minds or anything physically
damaging. We were Hippies and we all had great elevated fun. We are still here. Many of my friends returned ,in recent years for medical and/or recreational purposes. Then there’s the
ECONOMY-JOBS! One of the things I learned as a Hippie was demonstrations, sit ins walk-outs
Big Deal non violent waves do work. Organize at focusing on The Federal Level . WE THE PEOPLE not WE THE VIOLATED. I LOVE YOU GUYS. THE 55+ crowd need to come out of the
closet

These real estate funded nonprofits also work with the nazis, eerrr cops
to relentlessly harass the homeless, and anyone not like them. Boy, that’s
the last time I spend money at a holiday inn. Sure you can go on a
vacation just so you get drunk and plow your car into a tree.

Well the cases are 1:15-cv-00349 and 1:15-cv-00350 and the attorney that filed them should have his license reviewed. He certainly took liberties with the assertions made following the statement clause “On information and belief”. Speculative and over reaching are the kindest way to describe them.

It’s a shame Mr. Olson couldn’t weather the storm. He found a great location in a very supportive community. The flea on the dog was the neighbor across the parking lot. While the claim filed in the US District of Colorado is specious, to be kind, it is a real lawsuit and it requires hiring talented and capable attorneys to defend against it. That takes money away from other things. Also, because the folks at the Safe Streets Alliance hired David H Thompson of the Washington DC law firm of Cooper & Kirk PLLC, they are using a very novel approach to restore prohibition and “correct the universe as the know it”.

The Racketeering Influenced Corrupt Organizations Act is a law passed by Congress at the urging of Richard Nixon (who signed it) to combat the threat to social order the Media called the Mafia. This law is the genesis of the reprehensible practice used by law enforcement known as Civil Asset Forfeiture. When the government wants to make your life more difficult than it already is they simply claim that your property is guilty of a crime and they take it; often without filing any actual criminal charges. The burden is then placed on you to prove that your property is innocent. This can be a very expensive, aggravating, and time consuming process. It was designed that way.

If you are a brash US Attorney for the Southern District of New York, named Rudy Giuliani RICO is the law for you. RICO allows you to weave a fairy dust web and openly harass the people you are investigating. The allegations don’t have to be true, relevant, or even coherent. At any time you can create new ones, delete old ones, and resurrect ancient ones.

Essentially the RICO Act allows a never ending fishing trip based on the assumption that there was, is, might be, an agreement between criminals to break the law. It is a bad law, passed with the intention of catching some very bad men. If you can prove guilt RICO allows penalties that are the equivalent to using a sledge hammer to set a thumb tack. They are brutal by design.

The thing is the RICO Act was created to catch and punish people accused of being very successful criminals. IF you can prove the people are in fact criminals, and IF you can prove the do business with other known criminals, and IF you can prove they planned to do business, or are planning to do business in the future, and IF you can get a jury to agree with you: RICO lets you take everything they’ve got, everything they have ever had, and everything they might make in the future. That is why you have to take any legal action that even infers RICO may apply very seriously.

To file a civil action in the US District of Colorado federal court asserting the claim that RICO applies without a criminal component attached to the case is highly unusual, queer, extremely odd; not the typical way that the RICO statutes are attached to a legal proceeding. However, the law allows it until a federal court judge decides otherwise. David H Thompson knows this, just as he knows that a snowball stands a better chance in hell than he does once this filing lands in front of a judge.

In the case filed against Medical Marijuana of the Rockies LLC doing business as “Summit Marijuana” Mr. Thompson applies his fairy dust very liberally. First in how he construes acts of regulatory compliance as first criminal activity then again as proof of an ongoing conspiracy for state and local government to collect taxes.

I’m a little puzzled by that part of the claim against Mr. Olson and it’s one of the subtle differences in the two filings. In the still active case Mr. Thompson lists Governor Hickenlooper, Barbara Brohl the director of the Colorado Department of Revenue, and Lewis Koski, the director of the Colorado Marijuana Enforcement Division; are all named defendants along with the local licensing authority for acting in their official capacities.

In the claim against Mr. Olson Mr. Thompson omits them as parties to the action. Never the less he dedicates several pages to describing the collusion that is ongoing between dba “Summit Marijuana”, the state of Colorado, and the Town of Frisco Colorado. Mr Thompson describes the Retail Marijuana sales tax collection and remittance for December 2014 as a nefarious action that under concealment of night slipped $6.4 million dollars into the state’s Treasury while extorting an additional $510,790 under the guise of application fees.

The narrative retains the monotonous ring of tinnitus as it speaks of the Town of Frisco Colorado speculating on a $125,000 payday for calendar year 2015. I quote “Colorado and Frisco are thus enriching themselves by systematically authorizing, facilitating, and promoting serious federal drug crimes.”

If the repercussions of a federal lawsuit (with the guillotine called the RICO Act provision that provides for treble damages to the complainant) were not so severe; the rookie mistakes and fictional narrative of this brief would be entertaining. For example the first entity named as a defendant in this filing is Medical Marijuana of the Rockies LLC. That is the name of a corporate structure controlled by Mr. Olson, licensed by both the state of Colorado and the Town of Frisco to operate currently conducting business in a location over a mile away from the location stated in the cause for action.

Mr. Thompson, rather than using white out to correct the deficiency in the brief, constructs a fictional dba “Summit Marijuana” that is engaged in plotting evil, twisted activities that are detrimental to the courageous New Vision Hotels Two LLC doing business as The Holiday Inn of Summit County.. I kid you not, the complaint simply throws that on the wall hoping the assertion of a doing business as reference will stick.

At least it does until we get to Claim for Relief Count 4. Suddenly “Summit Marijuana” is magically revealed to be a Colorado Limited Liability Corporation, because it has to be. Quoting from the complaint “83 An “enterprise” for purposes of RICO “includes any … partnership, corporation, association, or other legal entity.” 18 USC 1961(4) Summit Marijuana is a Colorado limited liability corporation. Thus, it is a RICO enterprise”. Summit Marijuana LLC. is not a named defendant in this action. Reality just steals the edge right off of that “gotcha” moment.

Included in the filing are references to the exploits of John Doe 1. He is alleged to be a sinister faceless shadow banker; the very icon of the “Occupy” movement. For a rumored return of 11% John Doe 1 finances everything. In fact Mr. Olson doesn’t do anything without first consulting with this villain. Of course there is no actual proof that a John Doe 1 exists anywhere in the case filing. There are no contract documents, partnership papers, business plans, operating agreements, collateralized debt instruments; nothing that indicates or demonstrates that this faceless being has put up 1.6 million so that Mr. Olson can wreak reputational havoc and chaos upon New Vision Hotels Two LLC.

Who needs proof when constructing a RICO claim? Certainly not David H Thompson. I understand. I’ve read the filing. I can see how he just got caught up in the sizzle of the moment and just forgot include the pertinent facts of a criminal nature. It has to be an oversight. No responsible attorney would dare to clutter the docket of a US District Court with unfounded allegations, supposition, and conjecture would they?

What about the damages suffered by the brave New Vision Hotels Two LLC? Surely there is a clear and direct causation motivating this entity to enter the contentious fray that has evolved around the federal prohibition of a plant. I thought so before I read the motion. After reading the case filing I’m not so sure.

There is a claim that 2 youth ski teams cancelled long standing reservations because a retail marijuana business was going in on the other side of the parking lot. New Vision Hotels Two Inc even puts a dollar amount to the loss, $50,000. Yet there are no names to verify this happened. The damage claims are also riddled with future sounding words like “planning.”

Are the chaperones and monitors of these activities really reviewing the applications for retail marijuana licenses? That is the only way they could have known such an activity was being contemplated. Our did the managing interests within New Vision Hotels Two LLC engage in speculation with a prospective client and query the deal all by themselves?

Maybe, just maybe, there are other factors at work here and Mr. Olson became a convenient whipping boy? The hotel property in question is the Holiday Inn Summit County. It was opened in 1980 and suffers all of the issues of a 35 year old property has in today’s market place. The rooms are smaller than todays level of expectation. When the property is at full occupancy the physical plant begins to fail. The boilers and heat exchangers just can’t keep up with 216 showers going at once.

I reviewed the properties complaint history. I rejected the slew of vitriolic complaints that accompanied the filing of this lawsuit. However it is very hard to overlook the federal indictment for failing to abate the asbestos during the 2010 renovation work. That one item has more negative impact on the sales price of this property than cannabis will ever have. The property has a disturbing history with key control. I found numerous examples of the same room being sold to multiple guests. I also discounted the issue with the owner using a room master key inappropriately in March of 2014. Alcohol does wonderful things to people.

New Vision Hotels Two LLC managed to get themselves sucked into a politically motivated situation. I do not doubt that there were some concerns with the cannabis issue. Just not to the level represented in the complaint.

Which brings me back to attorney David H Thompson with the Washington DC law firm of Cooper & Kirk PLLC. You’re very lucky this case fizzled on its own. The merits of the filing are specious at best and the allegations walk right up to the line of fabrication. This does not reflect creative lawyering and an interesting and oddly compelling legal theory. I know that was the intent, but that is not the work product you produced. The client, the Safe Streets Alliance had far too much influence over the content of this document. I understand client pressure and senior partners dumping inconvenient messes on junior partners. You do not need clients like this. Had this case moved forward like filing 1:15-cv-00349 has I would be following up this post with complaints to the BAR requesting your firm be sanctioned and Mr. Thompson I would be requesting an investigation for your disbarment. The document you attached your name to could very easily be construed as a fraudulent cause of action

The US District Courts will eventually be dealing with this issue. When they do both sides will have to bring their A game. The facts of the case will not be as fungible as the case you presented here. Is RICO a tool to shut down the end the prohibition movement? Maybe, just not the way this case was presented.

RICO is a web built with fairy dust. It is overly broad, entirely to forgiving of abuse of process.; but yes I think it is something people in the emerging industry need to be prepared for.

Sorry for writing a book. Some issues you need to drill a little deeper into and this was one of them. I’m sorry it didn’t work out Mr. Olson. I’m impressed with the property and location you found. If you still hold the option I’d be very interested in talking